Tag: Deal

I’m Trying to Sell a Home – What are the Essentials in a For Rent Deal?

Hey, it's Joe.

Another question.

This is abouthow to talk to sellers and how to get your deals together.

This question is, "What mustyou have in a for rent deal in order for you to be able to sell the home?" Those thingsare the monthly payment must be at or below market rent.

If you don't, if you get themonthly payment wrong, it's not going to sell.

I guarantee it.

It won't sell.

Don't evenwaste your time.

If the monthly payment is not at or below market rent on a lease optionit will not sell.

B, You need a sign in the yard.

Sign in theyard will bring you in 25% of your buyers.

It's really important to have that sign inthe yard.

You can sell it with just a Craigslist ad or just a Postlets ad, but having thatsign in the yard will speed up the process dramatically and also make it easy for peopleto be able to find the property when they go out and look for it.

You know, if they'redriving out to look for it and there's no sign in the yard it's hard for you, hard forthem to find it.

Another is C, third way, is you don't allowyour seller to rent it while you're trying to rent it.

Now, the lease option memo, thefirst one that I'm giving you if you're using the Automarketer, is one that says they can,they have the right to go out and rent it themselves or sell it themselves, and youknow, cut us out of the deal.

They have the right to do that as long as they don't takeour leads.

What I would suggest as you get better at this is if they're trying to rentthe property to ask them would you give me 30 days to try to do this before you try torent it.

Let me get a buyer tenant in there instead of a regular tenant.

They're goingto be better tenants, you know, you don't wash a rental car.

You take better care ofthe things that you own, or at least you think you're going to own.

So let's sell it to alease option person.

Give me a little bit of time to that.

Will you allow me to do that?And most of the time they'll say yes.

Because if they don't, it's sometimes a little biteasier to rent a property than to lease option it and so they might be faster at it.

Plus,if they're pricing it at a different price than you are, that screws you up as well becausethey may have an ad in Craigslist right next to yours that has a lower price or a lowermonthly payment on it and that's not going to be effective.

The other thing that you need is a Craigslist ad.

The Craigslist ad is where you're goingget most of your buyers total.

So you've got to make sure that Craigslist ad is ghostedand by ghosting, that means that you post that ad and it sends you back an email sayinghey, your ad is posted.

And you click on that link and there it is, there's your ad andit looks great.

But then if you go into Craigslist through the front door and you look for thatad it's not there.

That's ghosting your ad.

And they do that for different reasons.

Ifthey think you're spam or if they think that you're using, if you're posting it from outsidetheir area, and usually I find that if you're within a state normally you can get your adto be posted.

If you're out two, three or four states away,you know, if I try to, if I'm in Indiana and I try to post in California, my ad gets flaggedalmost immediately or it gets ghosted immediately just because of the IP address of where I'mat and posting, it can recognize that and it won't allow me to post in California.

SoI have to have somebody in California to post that for me in order to make that ad work.

That's why you need boots on the ground sometimes in an area that you're not working in becauseyou need them to post your Craigslist ad for you as well.

So those are the vital things that you need in order to sell a property once you've gotan lease option memo on it.

If you screw up any of those things you probably won't getit sold.

The other thing that screws up a lot of propertydeals is that you lose faith from your seller.

They lose faith in you.

Or they don't thinkyou're competent, or they think you know, you're just not doing a good job and so theygo off and do something else and they say, no, I'm not really interested, or they don'ttake your calls anymore, or they take your sign out of the yard.

And that happens usuallybecause they've lost faith in you.

So do a good job, do a good job for them, you know,make sure you're trying to help them and learn to be competent.

Learn to speak competently.

All right.

Hope that helps.

Source: Youtube

How Do I Structure a Deal to Sell a Property That Needs Substantial Repairs?

Hey, it's Joe Crump.

I've got another onehere.

This one is another example deal that I'd like to explain.

This guy has, "…a sellerwith six properties that he wants to sell.

He's an investor.

" We run across a lot ofinvestors through the Automarketer.

You know, they have one ad, one property they're advertisingand then suddenly they say, "Well, I've got six others that I've got," so that's not uncommon.

"All these properties are pretty similar, so I'll just give you one so you can tellme how to structure the deal.

" And that makes a lot of sense when you're, especially whenyou're first getting started.

Do these one at a time.

Say, "Let's just start with one.

I'll show you what I can do.

We'll put it together.

If you like what happens and howit works out, we'll do the other five.

" So keep that in mind.

"So I'll give you one, tell me how to structure the deal.

" Value is $75,000.

The asking priceis $55,000.

He owns them free and clear.

He's owned them for fifteen years and used themas rental properties.

They all need work.

This one needs about $8,000.

A roof, a furnace,some cosmetic work.

It rents for $700 a month.

The taxes and insurance come out to $100 amonth.

This one is vacant.

Three of these are vacant, three are rented.

He says theyrent pretty quickly and when he starts advertising, but he didn't want to rent them if he wasgoing to sell and he doesn't have the money to do the fix up.

What can I offer him thathe might accept? He's retired, wants to stop being a landlord.

Kind of hates it and can'tdo the work on them any longer.

" Yeah, I don't blame him.

I hate being a landlord.

I hate to be property manager.

Get somebody else to do that work for you.

That's no fun.

You'll be burned out like this guy.

If he had somebody else who was managing his propertyfor all these years, it wouldn't be a big deal.

He'd just have them do it.

They'd betaking 10% of the income that was coming in, but he wouldn't have to do any of the work.

He wouldn't be burned out.

He'd be able to keep them.

They'd be in good condition nowbecause a good manager will take care of the properties.

They'll go back in and do thework when it's necessary and he will have properties that will be appreciated ratherthan depreciated which is what he's got going here.

So, he's owned these properties for a while.

He's got a lot of work that needs to be doneit.

If he's asking $55,000 and it needs $8,000 worth of work, that means the prices is goingto be $63,000 just to get it into a place where he can rent it.

If it's $63,000 andit rents for $700 a month, somebody coming in with $63,000, it's not terrible income,you know, I'm going the math in my head, but maybe 8% return on investment after payingfor principal, interest, taxes, or not, you're not going to – well, principal, interest – I'msorry.

If you're paying for it cash, you wouldn't have principal and interest, you have taxes,insurance and property management.

And my guess is it'd be somewhere in the 8%,9%, 10% rate, which is a pretty good return on investment if it's fully rented.

But notgreat.

And so, what can he do to make this work even better? And the better way to dothis is to make it, to give yourself more exit strategies and the way you can do thatis to get it on terms.

So if you got this property on terms for $55,000 and then soldit to an investor, let's say for $5,000, now you're up to $60,000.

He's got to put $8,000,he's going to be up to $68,000.

But if his payments are you know, if he's got rents for$700 a month and he's got $150 of that taxes and insurance, another $50 for, or $70 forthe property management.

Now he's down to $500, you know, let's say $450 a month, it'stake out $150 of that for himself, so $300 a month is what he can afford to pay on themonthly payment.

He takes that $300 a month, divides it into$55,000 and that's going to be the term of the payment, so, if you've got $55,000, dividedby $300, that's 183 months divided by 12, that's 15 years.

Now you've got a 15-yearno interest loan to pay off this property.

So, what happens is it pays the property offin 15 years.

Or you could put more towards it and pay off in 10 years or 8 years if youput the entire amount towards it.

So that would be a great investment for anybody becausethe entire principal is, every payment is entirely principal so every time you get ayou know, make a payment of $300, $300 is profit to you because it's paying down yourprincipal, even though it's not cash flow to you.

Plus you've saved another $150 a monthcash flow for yourself.

And that's probably the way that I would doit.

I would probably want to keep that property.

Maybe want to put the $8,000 in it myself.

Let's say I don't have $8,000 and I want to do this property, then I could sell it toan investor, you know, for the $68,000.

I get the $5,000 for myself and the investorhas to come with the, I guess that was the original scenario, wasn't it? I was sellingit to an investor.

So, I can either keep this property myselffor the $55,000, make the payments of $300 a month and then I have to come up with $8,000to fix it, or I could add $5,000 to it, sell it to an investor.

He makes payments on the$55,000.

I get $5,000 as cash.

I walk away from it.

He has to put another $8,000 intoit.

He's still got a good return on his money because you've set up the payment system forhim to get all principal, every payment that comes in is all principal.

And if you do that,it'll make it really easy for you to turn around and sell.

You might even be able toget $10,000 instead of $5,000 for it because it's still going to be profitable for himin the long run and all he's going to have to do is come up with $8,000 to buy this propertyfor the rehab and then you know, the $5,000 for you, or maybe $10,000 for you if that'sthe case.

So, his money into it instead of being $60,000or $65,000 is going to be $15,000 or $20,000 and there's a lot more investors out therethat have $10,000 or $15,000 or $20,000 to invest than there are people that have $50,000,$60,000, $70,000, $80,000 to invest and they're a lot more willing to do it on something likethis because it's got so much income coming in that pays itself down over time.

All right.

Hope that helps.

Hope it wasn't too muddled.

Thanks now.

Source: Youtube